Armour Energy Signs MOU to Supply Gas
Armour Energy on Thursday signed a MOU with MMG Century Pty Ltd (MMG) to work together towards gas supply arrangements from Armour’s exploration tenements in North West Queensland to MMG’s Queensland operations.
MMG’s Century Lawn Hill mine site is located on Armour Energy’s 100% owned ATP1107 which covers 7,943km2 and is pending grant by the Queensland Government.
On 16 July 2014, Armour Energy reported Contingent Resources of 364BCF 3C; 154BCF 2C; 33BCF 1C within ATP1087 relating to the Egilabria 2 DW1 lateral well drilled and hydraulically stimulated in 2013.
“The initial stages of the MOU will involve a scoping study by the parties to evaluate project feasibility and economics of gas supply for potentially expanded on site power generation at MMG’s Lawn Hill site, or development of new power generation facilities either on the Century mine lease or at greenfield sites between the mine and Mount Isa. Scenarios to be evaluated will include for MMG’s current and possible future needs and potential third party customers’ requirements,” Armour said.
The study will evaluate gas supply volumes of up to 7‐9 Petajoules per annum plus an overlay for potential third party requirements. Pricing will be determined so as to achieve a minimum return on invested capital for both Armour and MMG while providing “most favourable” price status to MMG compared with other gas sales contracts signed by Armour.
Should Armour farmout interests in its tenement to third parties, gas supply to MMG would relate to Armour’s equity gas only, unless a future upstream partner elects to participate pro rata in the sale of gas to MMG.
Armour has identified a number of stacked play targets within ATP1087 including conventional and underlying unconventional accumulations in the highly prospective Lawn Hill and Riversleigh Shales.
Commenting on the signing of the MOU with MMG, Armour’s CEO Robbert de Weijer said “This MOU is an important first step towards early monetisation and proof of concept for Armour’s potentially enourmous shale gas resources in the region.”
In June 2013, Armour announced a Heads of Agreement with APA Group to work together to facilitate the transportation of up to 330 Petajoules of gas per annum from Armour’s Northern Australian gas projects to various markets in Mt Isa, Sydney and Gladstone. Stage 1 of this project involves a 320km pipeline connection to Mt Isa.